The industry is shifting – here's how smart businesses will win in 2026
Growth in beauty and wellness has slowed, and new guest acquisition is declining. That's not a crisis, however. It's a turning point. On March 4th and 5th, Zenoti hosted two Inner Circle webinars – one for salons, spas, and barbershops and one for medspas – where CEO Sudheer Koneru offered an early look at new benchmark data and made the case for why AI is arriving at exactly the right moment for the industry.
Our recent Inner Circle sessions brought together beauty and wellness business leaders from around the world. We covered a lot of ground from fresh benchmark data to new AI capabilities, and the conversation reinforced something I've been feeling for a while: The rules of growth in our industry are being rewritten.
A sneak peek at where the industry stands
Our upcoming benchmark report, which now includes a new full-service salon category, offers an honest picture of the landscape. Early findings show same-store revenue growth in 2025 hovered around just 2% for all segments. More telling, new guest acquisition declined year over year across nearly every segment. In medspas specifically, same-store growth was just 1% even as new center openings grew 18% – a sign that the segment is expanding faster than demand can support.
These numbers demand a different playbook. This isn't the moment to expand aggressively or pour everything into brand and marketing. It's the moment to optimize, to squeeze more value from every guest interaction, every shift, and every dollar you're already spending.
A closer look at medspas
Medical spas face their own distinct pressures. Our benchmark data shows that top-performing medspas are running at 80% provider utilization – and the gap between top performers and the median is wider in this segment than in any other. That tells us the best medspa businesses are already capacity-constrained, which means growth has to come from making better use of the time providers already have.
One of the biggest drains on that time is charting. Providers spend significant portions of their day updating records and forms after every consultation – time that could otherwise be billable. That's why we built AI Scribe. It listens in the background during patient consultations, transcribes the conversation, and auto-fills charting forms for the provider to review and approve. Providers stay fully present with the patient instead of worrying about note-taking, and early adopters are seeing meaningful time savings – even 60 minutes per provider per day translates directly into additional appointments and revenue.
AI has been around for a while, but our industry is just now starting to leverage it in the right ways. As I shared during Inner Circle, "AI is showing up at the right time as a technology." Our data shows that businesses using Zenoti's AI tools (like HyperConnect) are seeing better growth than those that aren't. It's still early days, but the signal is encouraging.
AI is plugging the gaps you can't see
The biggest revenue leaks in most businesses aren't obvious. They're buried in missed calls, lost bookings, and front desk interactions that fall short. That's exactly where AI is making a difference today.
As I noted during the session, most of us as owners tend to focus on the appointment book, asking whether chairs and treatment rooms are full and service providers are utilized. The reality is that a huge number of revenue decisions happen before anything hits the book, at the front desk. Until now, there's been almost no visibility into what's happening there: the calls you're missing, the quality of the calls you are answering, how individual team members are performing, and so on. In tough times like these, that visibility gap is a revenue gap.
Take the front desk. Across 3,500+ locations using our AI-powered HyperConnect platform, we found that 30 to 35% of calls go unanswered, even at businesses that believe they're fully staffed. Our AI Receptionist now catches those missed calls and engages guests by voice or text, converting one in three into a revenue-generating action. It also handles outbound calls like appointment confirmations, using branded calling so guests see your business name and logo instead of a random number.
Missed calls are just the starting point, however. Even among the calls your team does answer, there's a real variance in how well different receptionists convert them into revenue. A seasoned team member performs very differently than a new hire. AI now analyzes every interaction and surfaces specific coaching moments where a call could have been converted but wasn't, giving managers visibility they haven’t had before. Over time, your whole team gets better at turning calls into bookings.
Then there are the turn-ways. Your best receptionist answered, did everything right, but there was no slot available. That guest walks away – and until now, you'd never know it happened. AI now tracks every turn-away and calculates the revenue impact, so you can see exactly how much business you're losing to availability gaps on a weekly or monthly basis.
Lastly, we often think of a completed booking as a success, but there's still revenue left on the table when add-ons, memberships, or packages aren't offered. Human receptionists get busy, forget, or hesitate to ask. Our AI Receptionist doesn't. It follows the script every time.
In other developments, our completely redesigned booking experience, coming soon, will make the guest journey more seamless than ever. We're also seeing more businesses adopt surcharging through Zenoti, saving 100% of their credit card transaction fees, a straightforward way to keep more of your revenue where it belongs.
Giving your team their time back
Revenue gaps aren't the only thing slowing businesses down. Hours lost to back-office tasks add up fast, and every one of those hours is time not spent with guests.
Take chargebacks. Our AI Dispute Manager now handles the entire process: writing the response letter, attaching supporting documentation, and preparing the submission for your review. No more chasing down evidence manually. It's already improving win rates, which means less revenue lost to disputes and less time your team spends fighting them.
Built into Zenoti, ZenChat, our new contextual messaging tool for your teams, replaces scattered communication across Slack, texts, and personal phones. Staff can message each other with guest profiles, appointments, and invoices linked directly in the conversation. Guest data stays secure within the system, and when staff move on, they lose access entirely. That means fewer security risks and no loose ends.
Integrated payroll eliminates the hours spent exporting data to ADP or other tools. Your team sees their earnings, commissions, and pay details right inside MyZen (the mobile app for staff). There’s no separate system to manage. Leave tracking and employee documentation now live in Zenoti too, so approvals happen in one place instead of bouncing between platforms. The revamped shift scheduling lets you share draft schedules with your team, get their input, and finalize together. The days of publishing a schedule and hoping it works are over.
The next frontier: Predictive intelligence
What excites me most is the next layer of innovations we are working on. We're building machine learning models trained on data from tens of thousands of businesses – not just appointments and payments, but conversation intelligence from calls, messages, and even guest sentiment. That combination of operational and conversational data is something no one else in this industry has, and it's what makes meaningful prediction possible.
We're working on predictive algorithms that we believe will have significant impact, including the ability to foresee churn and retain guests, optimize staffing levels, and forecast inventory needs. These are powered by the depth of data within Zenoti, and we'll be sharing more as they roll out.
Where we go from here
Winning in 2026 won't come down to having more locations or bigger teams. It will hinge on using AI and adopting technology to uncover what's been invisible – the missed call that should have been a booking, the loyal guest who's quietly pulling away, the overstaffed shift that's eating into your margins.
These capabilities are available now. If you haven't explored what Zenoti's AI can do for your business, there's no better time to start.
Sudheer’s passion for wellness led him to open Latitudes, a chain of gyms offering spas, salons, and yoga under one roof. Managing these businesses inspired him to create Zenoti, software designed to help beauty, wellness, and fitness brands thrive and grow. His engineering background and experience at companies like Microsoft were foundational. Under his leadership, Zenoti reached unicorn status in 2020. Sudheer’s mantra: Feel good to find your greatness and realize your full potential.
Sudheer Koneru
